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Optus ‘Resilient’ Despite 5% Profit Slump, Losing 85K Customers

Optus financial highlights for the current quarter to the end of June include earnings before tax (EBITDA) up 1% to $560 million, and underlying net profit A$174 million – a 3% jump. 

However, this was before exceptional items worth $18m, “ex-gratia payment” arising from workforce cutbacks.

Total net profit after tax fell by 5% year-on-year to $161m compared to $170m the same quarter a year ago. 

SingTel owned telco’s mobile business did well with total revenue rising 5% to $1.49 billion. 

“Mobile growth was underpinned by continued postpaid customer growth, with 113,000 postpaid net additions this quarter,” it said.  There are now 4.89m Optus post paid customers. 

This was on the back of several major smartphone launches including the Samsung Galaxy S II and the release of the white iPhone. 
The number of 3G data customers also increased to 5.29 million, a 4% increase from a quarter ago, pushing total mobile base to over 9m.  
However, the number of pre pay users slumped by 85,000 – meaning total net gain were 28,000 users. 
This compares to biggest rival Telstra, who netted a mass of new customers (1.6m in last year) and now has 43% total market share. 
“Australia has a clear No.1 mobile market operator – Telstra,” Nicole McCormick, Ovum’s senior analyst for Telco strategy, said, following the results. 
However, Optus service and equipment businesses also fared well – revenue grew 3% and 15% respectively while EBITDA was said to be “stable.”

Average revenue per user was lower, however, at A$45, reflecting what the telco says was “a higher mix of wireless broadband and increased value inclusions on selected plans.”

Operating revenue overall increased 3% to $2.31 billion. This growth spurt was thanks to “continuing cost management” from all segments, which has included outsourcing and slashing management jobs, Optus said yesterday. 

“Against the backdrop of a highly competitive Australian telecommunications market with competitors discounting prices and sacrificing profits, Optus delivered resilient results,” Paul O?Sullivan, Optus Chief Executive said. 
“We remain focused on delivering profitable growth in a rapidly changing market and driving differentiation through innovative digital services and products.” 

The Singapore owned telco cited Smart Safe back up mobile service and its “landmark” Optus TV Now mobile service and OfficeApps as helping it stay in the black. 

In its ‘Business and Wholesale’ sector, revenue was “stable” with growth in ICT and managed services and satellite revenue. EBITDA increased by 1 per cent, with stable margins.

It also cited some major contract boons including a four-year deal with Sydney Water, to deliver fixed, mobile services worth $30m as well as a 5 year “supply managed services for NBN Co Interim Satellite Service” worth around $200m.
In consumer and SMB fixed line services, on-net revenue excluding Pay TV was stable, although on-net revenue dropped  2%.  EBITDA grew 5 per cent to A$58 million, with margin expansion of 2%.   
The improvement was driven by higher on-net revenue mix and yield management initiatives.  
SingTel Group revenue rose 7% to $4.61 billion with 2% growth in earnings in the quarter although profits fell to $916m – a 2.9% drop.